### Relevant asset positions and any arbitrage profits

Assignment Help Finance Basics
##### Reference no: EM131050246

Suppose we observe that the ASX 200 stock index is at 5,555. We also observe that the future contract on that index with 12 months to expiration is at 5,600. If the prevailing bank bill rate is 6 per cent per annum and the dividend rate d = 4 per cent per annum, does this represent an arbitrage opportunity? Use a table show the relevant asset positions and any arbitrage profits.

#### Cost of external common equity

The cost of debt for firm XYZ is 6%. It's tax rate is 40%. The cost of retained earnings is 12% and the cost of external common equity is 14%. Retained earnings is \$5000. Th

#### Member of the treasury department

Who are they? Based on the current term (upward-sloping) structure of interest, and current short-term and long-term interest rates, what would be your strategy as a member

#### Calculate the irr

You are given the following information for a potential capital budgeting project: The initial investment is \$500. The life of the project is 3 years with the following cash

#### Under unfavorable conditions

If conditions are excellent, the NPV of the project is projected to be \$3,000; under fair conditions, the NPV is projected at \$950; and under unfavorable conditions, the NPV

#### What is the value of this option to abc

ABC, Inc. has a potential capital budgeting project with a growth option. The NPV of the project with the growth option is \$1,631 and without the growth option is \$472. Wh

#### Expected return and variance for a portfolio

1. Explain the interactions among market efficiency, capital budgeting, and the cost of capital. 2. a. Give two examples of anomalies in the financial markets. b. What does th

#### Calculate the wacc above the re break point

XYX corporation's capital structure calls for 60% debt and 40% common equity. The company's cost of debt is 8%. Retained earnings are estimated to be \$160 million. The comp

#### Explain the logic behind conclusion

It has been shown that in the absence of taxes and other market imperfections firm value will be unaffected by dividend policy. Explain the logic behind this conclusion.

### Write a Review 